Signed, Sealed, Deposited (How To Save The Postal Service) - David Dayen/psmag [View all]

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Signed, Sealed, Deposited
How to save the Postal Service—and protect ordinary Americans from financial predators—in one easy step: bring back postal banking!
By David Dayen - psmag
February 15, 2013

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How bad have things gotten for America’s national mail delivery system? The US Postal Service lost $1.3 billion last quarter, and this was regarded as good news. The venerable agency has been saddled with significant financial problems since a 2006 law forced it to pre-fund 75 years of employee retirement benefits, something no other public agency or private company has to do. This cash crunch (the Postal Service gets no money from the federal government and must survive on the revenues it generates) has led to austerity measures for the nation’s second-largest employer (right behind Wal-Mart). Mass layoffs last year were followed, earlier this month, by the announcement that Saturday deliveries of first-class mail will cease come August.

As many have noted, this is a largely manufactured crisis. Simply relaxing the pre-funding requirement—as the postmaster general beseeched Congress to do this week—would wipe out virtually all of the Postal Service’s deficit. (Absent this heavy payment, the agency would have made $100 million in the last quarter.) But given the reduced use of letters in an age of digital communication, it’s nonetheless true that the Postal Service is due for some changes to its business model. Democrats from Sen. Tom Carper to Rep. Elijah Cummings have laid out various ideas. But there’s one idea they haven’t suggested that would kill two birds with one stone: make money for the Postal Service and level the financial playing field for some of the most vulnerable Americans. Namely: We should allow the Postal Service to return to the practice of offering simple banking services.

According to the FDIC’s 2011 National Survey, over 10 million US households are “unbanked,” with no access to the financial system. Another 24 million households are “underbanked,” meaning they have a bank account but they also rely on providers of “alternative financial services”: remittance or money order shops, payday lenders, check-cashing operations, pawn shops, or associated services. Many of these services are among the most unscrupulous in American society, preying on people with few other options and charging usurious interest rates or carving out large fees. These roughly 68 million unbanked or underbanked Americans represent a huge market for non-bank financial predators.

In other countries, this market is served at the post office. Almost every developed nation in Europe and East Asia operates a postal banking system. A few have been privatized, including what was the world’s largest savings bank, Japan Post. And some operate as a private-public partnership. But countries like Israel, France, Switzerland, Russia, South Korea, South Africa and more all allow their citizens to perform simple banking tasks at the local post office. New Zealand’s Kiwibank, a recent innovation, was established in 2002 specifically to protect citizens from financial predators. It has been wildly successful, according to Ellen Brown of the Public Banking Institute, with one in eight Kiwis moving their services to the postal bank in the first five years.

What’s more, we used to have a postal banking system of our own. Starting in 1911...

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More: http://www.psmag.com/business-economics/us-postal-service-saturday-delivery-postal-banking-52778/